Friday, 1 March 2013

BUDGET 2013-14

Being concerned with the Indian capital market I am very curious and enthusiastic to study the union budget 2013-14. Hence this is small synopsis of union budget starting from rail budget which was announced on 26th of February 2013.
"Any economist will tell us what India can become.  We are the tenth largest economy in the world.  We can become the eighth, or perhaps the seventh, largest by 2017.  By 2025, we could become a $ 5 trillion economy, and among the top five in the world.  What we will become depends on us and on the choices that we make.
Swami Vivekananda, whose 150th birth anniversary we celebrate this year, told the people: “All the strength and succour you want is within yourself. Therefore, make your own future.” -PC at end of Budget speech 2013-14 ...
Now Starting with the rail budget

Rail budget
Ø  67 new express
Ø  26 new passengers
Ø  22 new rail lines are proposed in the recent rail budget.
Ø  72 new local in Mumbai
Ø  10% reservation for women in RPF for the matter of women securities
Ø  Tatkal & Superfast fares increases but indirect way there is 5% surcharge on fuel. And decision of surcharge to increase and decrease can be taken two times in a year.
Ø  Some selected train will goes hi-tech, According to recent budget there will some WIFI enabled train
Budget was first introduced in India on 7th April, 1860 from East-India Company and it was presented by James Wilson.

Now starting with statics which sows the clear picture of the Indian economy

India’s GDP growth is decelerating.

This year 5.0% growth is expected and the reason for the same is recovery in investment and industrial production is expected to take time, while agricultural production continues to be dependent on the uncertainty of monsoon.
In India, the annual growth rate in GDP at factor cost measures the change in the value of the goods and services produced in India, without counting government’s involvement. Simply, the GDP value excludes indirect taxes (VAT) paid to the government and includes the original value of products without accounting for government subsidies.


Is exhibiting a downward trend and reasons for the is Moderation across components (primary articles, fuel and power, manufactured product). This enabled the RBI to cut the repo rate and CRR by 25pbs each in January 2013 to stimulate growth.


Inflow in  USD Billion
Inflow is showing improvement.


Estimated  (in Lakh  Crore)
Actual (in Lakh  Crore)


BUDEGET 2013 Highlights

Ø  Investor with 10% or less to be treated as FII/Financial Investor and more than 10% will be treated as FDI. Government to set up committee for implementation of above proposal.
Ø  Measures to encourage infra
a)      Encourage infra Debt funds
b)      Tax free Bonds – Rs. 50,000 crores
Ø  Indirect Tax Related Proposals
a)      Imported set top boxes to be more expensive – customs duty rate increased to 10 % from 5 %
b)      Increase in import duty on high end motor vehicles, motor cycles and yachts and similar vessels.
c)      No CVD on imported ships and vessels
d)     Increase in specific excise duty on cigarettes, cigars and cheroots
e)      Increase in excise duty on suvs from 27% to 30%
f)       Excise duty on marble double from Rs 30 per square meter to Rs 60 per square meter
g)      Excise duty on mobile phones priced above Rs 2000 increased to 6%
h)      Service tax voluntary disclosure scheme introduced to recover taxes from 1st October 2007, without interest and penalty
i)        Specified vocational courses, testing activities in relation to agriculture and agricultural produce exempt from service tax
j)        Finance Minister reiterates commitment to GST implementation – sets aside 9000 crores towards CST compensation
SEBI to unify various investment forms (FII, QFI, etc) and adopt risk based approach for encouraging and simplifying portfolio investment route for foreign investors
Surcharge @ 10% for the super-rich with taxable income above Rs. 1 cr introduced only for FY 2013-14
Introduction of TDS @ 1 % on transfer of immovable properties over 50 lakhs
2 major ports to be set-up in west Bengal and Andhra Pradesh




Fiscal Deficit is the difference between the government’s total expenditure and its total receipt (excluding borrowing)




Revenue deficit is the difference between the government’s revenue expenditure and revenue receipts (excluding borrowing)

Amendment of interest to private Equity sector
  • GAAR provision modified as promised by the Finance Minister in his earlier press release. GAAR to be effective from FY 2015-16
  •  No clarity provided on international issues surrounding tax on indirect transfers.
  • Formal enactment to say that tax residency certificate shall be necessary but not a sufficient condition for claiming tax treaty benefits. This has been introduced with retrospective effect and applies from financial year 2012-13
  • Income from investment made by a non resident investor in an infrastructure made by a non-resident investor in an infrastructure debt fund (IDF) set up as a mutual fund reduced to 5 %
  • Buy back of shares from an unlisted company exempted from tax with effect from June 1, 2013. However, distribution tax applicable @20% on the difference between the consideration for buy back and amount received by company on issue of shares.
  • Sec 10(23FB) is available only to category 1 Alternate investment funds (AIFs) with sub category as venture capital fund (VCF). VCF has been restrictively defined under the AIF Regulations. Infrastructure funds even though category 1 may not get 10 (23FB) exemptions as it is separately defined.
  • Income of regulated securitization trust and distributions by such securitization trust exemption from tax. Dividend Distribution Tax applicable – 25% in case of individual / HUF and 30% in case of other persons.
  • Exemption from cascading effect of dividend extended to dividends received from foreign subsidiaries provided the same is re-distributed by Indian parent in the same year.
  • Concessional rate of 15% on dividend received from foreign subsidiaries continued for one more year
  • Securities Transaction Tax (STT) reduced on sale of futures in securities and equity oriented mutual funds.
Personal Tax - Rates

Income Slab (INR)
Tax Rate (%)
Upto 200000 *
200,001 to 500,000 #
500,001 to 1,000,000
1,000,001 and above ##

Ø  Basic threshold limit remains unchanged
Ø  In case of senior citizens – INR 250,000
Ø  In case of very senior citizens – INR 500,000
Ø  Rebate of INR 2,000 for resident individuals having total income up to INR 500 thousand
Ø  Surcharge @ 10 Percent on total income exceeding INR 10 mn

Indirect Tax
  • Benefits for leather and footwear industry – Basic Customs duty on 20 specified machinery for use in the leather industry or footwear industry reduced from 7.5 % to 5 %
  • Textile mfg will welcome reduction of Basic custom duty on specified textile machinery and parts from 7.5% to 5%
  • Basic customs duty on import of old cars increased from 100% to 125% with immediate effect
  • Aviation industry: Exemption from education cess and secondary & higher education cess withdrawn on aeroplanes, helicopters and their parts
  • Goods manufactured and captively consumed in manufacture of final products under the area based exemption scheme available on Uttrarakhand and Himachal Pradesh exempted from excise duty.
  • Penalty under ST now imposed on directors and officers of the company for specified offences in case of willful actions
  • Exemption from ST on copyright in cinematography limited to films exhibited in cinema halls
  • Now Eating out is going to be more expensive: FM Proposed to levy ST on all air conditional restaurants. 
  • ST to be applicable on vehicle parking in public places
  • Transportation of petroleum and petroleum products, postal mail or mail bags and household effects by rail or vessel within India to now be subject to ST
  • Abatement from ST on construction of commercial complex and high value residential units reduced from 75% to 70 %
  • Excise duty on chassis of diesel motor vehicles for the transport of goods reduced from 14% to 13 %

After Budget speech Markets reacted negatively to higher revenue projection from divestment and spectrum sale could lead to higher-than-estimated deficit number. Also, amendment to DTA indicating submission of residency certificate would not be sufficient condition for claiming benefit brought the scare of GAAR back among institutional investors

The Sensex was down 0.4 percent as of 12:39 p.m., after earlier gaining as much as 0.88 percent. The Nifty fell 0.31 percent.
Coming to currency the rupee fell against the U.S. dollar, trading at 53.99/54.00 from levels of around 53.70 before the budget.
Now talking about commodity market gold fell by Rs 180 to Rs 30,150 per ten grams, silver lost Rs 335 at Rs 55,265 per kg on reduced offtake by jewellers and industrial units. Traders said emergence of selling by stockists at prevailing higher levels amid a weak global trend mainly led the fall in both gold and silver prices.

Today only On CAD issue PC appealing to people of India not to demand so much GOLD.if the people of India stop buying gold for one year, that will solve most of our problems in that year... Perhaps he is right in this regard do you agree?? I would raise my thumps on his statement and now I would like to see India’s appetite for gold

To conclude I believe that the Finance Minister has delivered a budget that suggests economic stability supersedes political considerations.

No comments:

Post a Comment